There’s an ugly little secret about the software business that is ripe for a change. The average user of a software application, at best, taps less than 10% of its features & functionality. As the SaaS sea-change continues to unfold, the implications of this simple fact for the software industry are very powerful. The dramatic success of Apple’s iTunes is about enabling people to easily buy a single song instead of the entire album the music industry would like to force consumers to purchase. Vendors of bloatware, applications full of unwanted and unused “features,” would do well to consider the iTunes lesson. If given a choice, buyers are not slow to vote with their dollars and to overthrow entrenched industry patterns in the process. Will SaaS vendors seize the “iSoftware” opportunity for industry leadership?
An Unhealthy Game
Traditional software vendors have compelled their customers to pay for unwanted features & functionality, and definitely unsatisfactory “support,” for many decades. In order to get access to the next “upgrade” in the application feature set, customers have had to pay yearly maintenance & support fees of anywhere between 15-20% — or more. The ugly truth is that this scenario is a thinly veiled extortion game in which customers are forced to buy what they don’t want or need in order to gain access to what they do.
The effects of the bloatware have not been good for either the industry or the customers. Software quality in both reliability and performance suffers as layer upon layer of additional code is bolted onto the application to dazzle the prospects. If one vendor adds a “feature,” all of the others in that market will soon shove the same into their packages, regardless of whether or not it has any real value or utility for the customer. As the software core is stretched beyond its original design specifications to accommodate the additional glitzy bells & whistles, things begin to break under the load. Patch follows patch to “fix” the resulting bugs, each causing even more unintended outcomes — and more expense. The money that the bloatware vendors think they are making is lost in increased support costs.
The SaaS Advantage
The SaaS model offers an effective path away from the bloatware track. Unlike the traditional on-premised software model, a SaaS vendor is able to see how a customer is actually using their application. This is where the opportunity begins to offer the authentically pay-as-you-go solution that customers want. There are billing packages that can enable an application vendor to charge a basic rate for the core functionality, and to easily accommodate customers who want to extend the feature set. If the basic level does everything that your customer’s business requires, offer them that. When they grow to where another level of functionality is required, expand the relationship.
Ultimately, getting off the bloatware track is about moving towards customer centricity. I recommend the “iSoftware” approach, selling the customer only the functionality they really need, because it also opens the door to increasing the “stickiness” quality of the relationship. By monitoring actual usage over time, the vendor is able to make highly specific offers that translate immediately into increased productivity and profitability for the customer. That increase is what the customer truly wants to buy — the software itself is only a means of getting there.
(The iTunes logo is trademarked by Apple, Inc. The bloatware image comes from one of Apple’s “Get-a-Mac” videos, which are well worth the seeing.)